Convertibles quiet; Navistar, Chesapeake Energy drop in heavier volume; Patriot Coal down

By Cristal Cody

Prospect News, June 25 - The convertible bond market started the week fairly quiet with a few names sticking out in trading, sources said.

"It was definitely a pretty slow day - a summer Monday," a trader said. "Nothing's going on."

Navistar International Corp.'s convertible debt weakened in heavier-than-average volume as shares slipped.

Chesapeake Energy Corp.'s convertibles were more active than usual - trading higher before going out lower, traders said.

The bonds traded "down a point on hedge" in higher volume going out, one trader said.

Another trader saw Chesapeake Energy's bonds "active and higher, traded at 84." The bonds "may have come in a bit toward the close," the trader said.

Patriot Coal Corp.'s convertibles traded lower on Monday in light trading volume.

Other bonds that traded in reasonable size on the day included Powerwave Technologies Inc.'s 3.875% convertible subordinated notes due 2027 and Sonic Automotive Inc.'s 5% convertible senior notes, a source said.

Navistar active

Navistar International's convertible debt was "fairly active today," a trader said.

Several sources saw Navistar's 3% convertibles due 2014 trading lower in heavier volume as shares fell $1.63, or 6.03%, to close at $25.39 a share.

"Using theoretical hedge of 35, bonds traded at 91.605 versus [a share price of] $25.35, which is moving down in line neutral," a trader said.

Another trader saw the convertibles at 91, 91.5 versus a share price of $26.00, about ½ a point weaker on the day.

The commercial and military bus and truck manufacturer is based in Lisle, Ill.

Chesapeake Energy weakens

Chesapeake Energy's 2.5% convertible senior notes due 2037 traded going out Monday in the 84 bid, 86 offered area, as the stock dropped $1.58, or 8.49%, on the day to end at $17.03 a share.

The company sold $500 million of the notes in 2007 at 97.625.

The Oklahoma City-based company develops and produces natural gas and oil in the United States.

Patriot Coal weaker

Patriot Coal's convertibles moved lower on Monday in lighter trading volume.

"Not real active," one trader said, seeing the 3.25% convertibles due May 31, 2013 at 22 bid, 23 offered from 28 bid, 33 offered on Friday.

Another bond source saw the notes at 20 bid, 23 offered, while the shares dropped 8 cents, or 6.35%, to close at $1.18.

Patriot Coal sold the convertibles in 2008 at par.

The St. Louis-based coal producer's have been weakening steadily since its last earnings report listed a customer default.

The company has been trying to restructure and faces an expiration of a lender commitment letter July 6.

Mentioned in this article:

Chesapeake Energy Corp. NYSE: CHK

Navistar International Corp. NYSE: NAV

Patriot Coal Corp. NYSE: PCX

Powerwave Technologies Inc. Nasdaq: PWAV

Sonic Automotive Inc. NYSE: SAH

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.